Goldman Sachs Reiterates Buy Rating on VMware (VMW)

Goldman Sachs is out with a research report this morning, where it reiterates its Buy rating on VMware Inc.

; it has an $88 price target on the stock. The GS analysts said that, after 3 days of VMworld, their takeaways were: 1. “VMware in command of the future of the data center. Customers and partners are indicating that VMware is the business standard and has already won the “hearts and minds of IT”. We noted less discussion of Microsoft as a threat than at last year’s conference. 2. Positive feedback on 3rd party mgmt tools from vendors such as Quest, VKernel, Akorri, and others. A growing ecosystem is a good sign. Feedback is mixed on VMware’s mgmt tools so far, though we expect longer-term success here. 3. Still not much customer/partner feedback on improvements to View 4.5, but we did hear of some 10K+ seat deals that closed this week. Windows 7 is widely expected to be a big stimulus to desktop virtualization as customers bristle at having to buy new fat-client desktops. 4. We’re not seeing significant moves from large enterprises to external cloud computing so far. Cloud adoption (for compute and storage) is still largely at the SMB level. Significant shifts by the enterprise will take time given resistance to disrupting legacy systems. Cloud does, however, force internal IT to benchmark cost/performance and seek technologies such as virtualization and self-service, benefiting VMware."